Dubai Shares Drop Most in Month on BlackRock U.A.E. Holding Cut

Dubai’s stock index tumbled the most in a month after BlackRock Inc. cut its holdings in United Arab Emirates shares, citing “speculative excess.” Saudi Arabia’s gauge rose above 9,000 for the first time since 2008.

The DFM General Index declined 1.4 percent, the most since Jan. 26, to 4,122.88 at the close in the emirate, while Abu Dhabi’s measure slid 0.9 percent. That pared the benchmarks’ gains over the past 12 months to 112 percent and 61 percent respectively. Dubai Investments PJSC, the company that operates businesses ranging from real estate to dairy, retreated 3.1 percent. Arabtec Holding Co. fell to the lowest since Feb. 3.

“The market takes a breather once in a while and that’s a healthy thing,” said Yaser Abushaban, the executive director for asset management at Dubai-based Emirates Investment Bank PJSC. “They have had a very good run this year, and over the past 12 months.”

BlackRock Frontiers Investment Trust, a $297 million fund run by the world’s biggest asset manager, said last week it “substantially” cut holdings in U.A.E. shares in January on concern about the level of speculation. Before today, both Dubai and Abu Dhabi measures were in overbought territory, with their relative strength indexes trading above 70, a level which signals to some analysts that a measure has gained too much.

Dubai Investments dropped to 3.47 dirhams, while construction company Arabtec fell 2.5 percent to 4.75 dirhams.

Saudi Spending

U.S. stocks fell last week as the Federal Reserve said it likely will continue reducing stimulus, while emerging-market stocks advanced after Ukrainian opposition leaders signed a peace agreement to end a deadly political crisis. Viktor Yanukovych was removed from the presidency in a vote by lawmakers yesterday. Standard & Poor’s said Feb. 21 the country is at risk of default.

Saudi Tadawul All Share Index rose 0.4 percent to 9,023.42, bringing the advance for the year to 5.7 percent. Saudi Basic Industries Corp., the Middle East’s biggest petrochemicals maker, gained 0.4 percent and Al Rajhi Bank, the nation’s largest listed lender, increased 0.7 percent.

Saudi Arabia is embarking on “huge infrastructure spending,” said Tariq Qaqish, a director at Dubai-based Al Mal Capital PSC. “The growth prospects for most of the sectors listed on the exchange should be solid in 2014 due to the global economic outlook, especially in terms of chemical sector.”

Spending has been higher than the government forecast every year since at least 2008, according to National Commercial Bank data. Last year, the kingdom spent a record 925 billion riyals ($247 billion) to build roads, airports and industrial centers.

Egypt’s Rally

Egypt’s EGX 30 Index rose 1.5 percent to 8,008.86, the highest close since September 2008 as EFG-Hermes Holding SAE, the country’s biggest investment bank, jumped 8.1 percent.

Bahrain’s measure added 0.8 percent and Qatar’s 0.1 percent. Oman’s benchmark lost 0.4 percent and Kuwait’s declined 0.1 percent.

Israel’s TA-25 Index fell 0.2 percent at the close in Tel Aviv. The yield on the government’s benchmark bond due in March 2023 declined one basis point, or 0.01 of a percentage point, to 3.4 percent.

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